The S&P 500 index has become increasingly concentrated in a small number of mega-cap technology stocks, but we think there are plenty of investment opportunities amongst the ‘S&P 493’.
We are looking for companies that are getting better and richer, whose balance sheets are in good health. And we want to sell those becoming worse or poorer. This sounds somewhat like wedding vows, but we only want to stick around for the good times.
When people marry in the UK, they traditionally vow to stay together: “For better, for worse, for richer, for poorer.” I thought of that vow recently when explaining our job to someone.
We try to buy attractively priced companies that are getting better and to sell companies if they’re getting worse. I’m wedded to the process, not the stocks, so no pledges of fidelity there – we’re trying to help investors become richer, not poorer!
It sounds an obvious investment tactic, but millions of investors don’t do this. Most passive investment funds have no concern at all about whether what they own is improving or deteriorating. Just one question drives what they buy and sell: how big is the company?
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